Shareholders in UK Mail (UKM) benefited from a substantial hike in the full-year dividend, as the Birmingham-based distribution business achieved its targeted cover ratio of 1.5, while net profits were up 30 per cent to £17.5m. There were operational and trading improvements across all its divisions last year, but the parcels business, which supplies 43 per cent of revenues, remains the stand-out performer. Underlying profits rose 28 per cent, thanks largely to volumes gains.
Strong customer retention also underpinned a 2 per cent increase in volumes at the group's mail business, which accounts for 48 per cent of revenues. That sounds modest, but needs to be set against industry trends: overall volumes in the UK are estimated to have contracted by 5 per cent annually in recent years.
Chief executive Guy Buswell believes the group's focus on "digital innovation" has allowed it to steal a march on rivals. New product and service offerings include 'imail' and 'ipostparcels'. Additional automated handling capacity is coming on stream, while the central distribution hub is being re-located from Birmingham to Coventry as a result of the planned HS2 rail link. Mr Buswell said these big capital projects were progressing well, but that the full impact of the current investment phase won't become fully apparent until the year to March 2017.
Investec expects EPS of 43.3p for this critical period.
| UK MAIL (UKM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 610p | MARKET VALUE: | £334m | |
| TOUCH: | 601-615p | 12-MONTH HIGH: | 715p | LOW: 460p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 132p* | NET CASH: | £27m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 385 | 17.8 | 23.4 | 18.2 |
| 2011 | 396 | 16.1 | 21.2 | 18.2 |
| 2012 | 429 | 12.9 | 17.5 | 18.2 |
| 2013 | 475 | 17.8 | 24.7 | 18.8 |
| 2014 | 509 | 22.8 | 32.0 | 21.3 |
| % change | +7 | +28 | +30 | +13 |
Ex-div: 25 Jun Payment: 25 Jul *Includes intangible assets of £17.5m, or 32p a share | ||||
